Ethical Foundations

Ethics is the backbone of the company. Employees want to work for an ethical company free from workplace discrimination and harassment. They want to work for a company that values their opinions, treats them fairly, takes complaints seriously, promotes transparency including having a hot line, and one that does not retaliate against them when improper activities are reported, An ethical environment also provides ethical leadership by having supervisors and top management set an ethical tone at the top.

According to a 2024 survey from the Society for Corporate Governance and Deloitte writing for The Wall Street Journal, 48 percent of respondents reported that their boards of directors provide no dedicated oversight of corporate culture. Of those that do oversee culture, many monitor whistleblowing complaints or hotline reports, the problem of which is dealing with the matter after it occurs rather than establishing an ethical culture whereby these matters are mitigated through ethical leadership that encourages reporting wrongdoing through proper channels.

Creating an Ethical Culture

I have blogged before about how to create an ethical culture in business. An ethical culture requires consistent standards that promote honesty, transparency, fairness, and responsiveness to the needs of employees. It generates respect for differences in the workplace including diversity and inclusivity. An ethical culture is gained when top management acts ethically in all of its communications and behavior. Top management should set an ethical tone that makes it clear to employees that it won’t tolerate deviations from ethical standards. It is also used to attract the right talent, who are employees that want to work for a company that promotes ethical values.

The Wall Street Journal article by Pressler, Rossen and Velias, points to four primary areas that leaders should promote to help build an ethical culture.

Ethics Expression

Ethical standards should be communicated clearly including expectations for employees’ behavior. The starting point should be to establish ethical values that drive ethical behavior in the organization.

I have blogged many times about what values are—their purpose and how they generate ethical behavior. Values are the motive behind purposeful action. Those who value courage are willing to stand up for what they believe, even in the face of strong condemnation. It requires integrity, which means to act in accordance with ethical values. It means to act with courage and in accordance with one’s principles which should be consistent with organizational values. Integrity is the essence of ethical behavior because it requires that one act in accordance with principled behavior.

Ethics Engagement

The key here, according to The Wall Street Journal piece, is that  “employees need to understand the implications of their actions, how to navigate complex situations, and how to make choices that are in the best interest of the organization and its stakeholders.” An important part of such behavior is “to understand how to comply with laws and regulations.” This is essential in today’s environment whereby various laws and regulations are in effect that should influence behaviors including anti-harassment regulations, anti-discrimination, and other requirements. Organizations must also act consistently and conform to the rules and regulations of the SEC and PCAOB, both of which set the boundaries for ethical financial reporting.

Ethics Empowerment

Organizations should establish mechanisms that promote the reporting of wrongdoing without fear of retaliation. This means to establish clear channels to report such behaviors. In some organizations, such reporting goes through the HR department. I do not believe this is the best way to go. The HR folks have enough to deal with without being drawn into the handling of ethical dilemmas. Instead, there should be an Ethics Compliance Officer who sets an ethical tone at the top and, with the help of top management and the board of directors, establishes clear guidelines for reporting.

Ethics Evaluation

Employee assessment should include whether employees have acted in accordance with ethical values and consistently with compliance requirements. The decision point for selecting an organization to work for should include whether the organization informs employees who seek a position with the organization of the ethical expectations of top management and the board of directors. Assessment activities could include interviewing stakeholders, benchmarking ethical initiative, and evaluating ethical behavior in teams. Organizations may want to recognize those employees who set an ethical example for others so that they see there is a reward for acting in accordance with the highest ethical standards,

Evaluating a Company’s Culture

Job seekers rarely evaluate a company’s culture during the interview process, which is why the company must make its ethical expectations clear, reporting requirements known, compliance reporting (i.e., rules and regulation set from outside the organization) and ethical performance evaluations.

Shelby Veltkamp writes about “ethical recruitment retention” that it is important for job seekers to assess the ethical culture of an organization during the interviewing process. Potential employees want to know what the company stands for, how it promotes a “speak up culture.” This is easier said than done but she provides the following advice.

• Make public the organization’s code of conduct and how it handles ethical issues.
• Integrate a whistleblower program for internal concerns.
• Ensure zero tolerance for retaliation.

Creating a “Speak Up Culture”

Martha Finney writes that a “speak up culture” refers to a healthy, supportive environment, where team members feel free to share their ideas, opinions and concerns, without fear of retaliation or penalty. Often people associate it with calling out toxic company culture or even an individual member of staff, however it can also refer to people feeling comfortable expressing different ideas that have previously gone unexplored. 

I have previously blogged about a speak up culture. To be successful, a speak-up culture should provide a safe space for employees to speak up and speak out, where they can feel emboldened to point out both challenging areas and opportunities for new disruptions and innovations. Rather than waiting for employees to speak up, leaders should take the initiative and start a structured debate within the organization. It is important to give employees an opportunity to speak up and respond appreciatively when they do. Employees should never be retaliated against for speaking up about a truthful matter or one of great concern to the employee and organization.

If we assume that most employees want to work for an organization that has an ethical culture, then having a speak up culture is essential. Top managers should make employees feel comfortable in bringing matters up in the open, seeking out support for their point of view, and explaining why the issue is of concern.

Conclusions

In a recent Harvard Business Review (HBR) article, the authors describe the speak up culture problem well: “When employees share novel ideas and bring up concerns or problems, organizations innovate and perform better. Employees are often the first to see issues on the frontlines, so their input can really help managerial decision making. Yet, managers do not always promote employees’ ideas. In fact, they can even actively disregard employee concerns and act in ways that discourage employees from speaking up at all.”

Every company should create a culture of ethics. If the senior leadership ignores or downplays a culture of ethics, they have created barriers to ethical behavior and opened the door to ethical dissonance, a situation where an individual’s ethics are at a higher level than that of the company. This kind of corrosive environment can lead to a fear of reporting wrongdoing and perpetrate an unhealthy environment.

Posted by Dr. Steven Mintz, aka Ethics Sage, on June 17, 2025. Steve is the author of Beyond Happiness and Meaning: Transforming Your Life Through Ethical Behavior, which is available on Amazon. Learn more about his activities at: https://www.stevenmintzethics.com/ and signing up for the newsletter.